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TMI Blog2012 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... CA.NO.1388 OF 2008 - - - Dated:- 29-2-2012 - H L Dattu and Anil R Dave, JJ. For Appellants: Mr K Swami, Adv. Mrs Arti Singh, Adv. For Mr A K Sharma, Adv. for Mr B Krishna Prasad, Adv. For Mrs Anil Katiyar, Adv. For Respondents: Mr Tarun Gulati, Adv. Mr Sparsh Bhargava, Adv. for Ms Bina Gupta, Adv. Mr Mohit D Ram, Adv. Ms Vaishnavi K Adv. For Ms Meenakshi Arora, Adv. JUDGEMENT For the sake of convenience, we take the facts in C.A.NO.949/2004, for disposal of these appeals. 1. This appeal is directed against the judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal (for short 'the Tribunal'), Mumbai in Appeal No.E/158/03-Mum. dated 25.07.2003 . By the impugned judgment and order, the Tribunal has partly allowed the appeal filed by the respondent-assessee, inter alia, stating that the assessee is entitled to avail the benefit of the Notification No.8/97-CE, dated 1.3.1997. It is the correctness or otherwise of the said finding and conclusion reached by the Tribunal, is the subject matter of this appeal. 2. The core issue that falls for our consideration and decision is: whether the finished goods manufactured by the 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty amounting to ₹ 13,53,695/- which, according to the adjudicating authority, is a short payment of duty amounting to ₹ 2,19,70,733/-. It is further alleged in the show cause notice that the unit has also cleared 12,78,814 L.Mtrs. of finished goods, rejects and waste worth ₹ 1 ,30,98,643 /- during the period starting from 16.10.2000 to 31.12.2000 in DTA on payment of 8% basic excise duty amounting to ₹ 13,52,262/-, which, according to the adjudicating authority, is a short payment of duty amounting to ₹ 2,13,30,228/-. According to the adjudicating authority, the respondent has contravened the provisions of EXIM Policy and Rules 100 D and 100 E of the Central Excise Rules, 1944 (for short the Rules ) and also the conditions prescribed under 100% EOU scheme. Further, according to the adjudicating authority, the respondentindustrial unit has contravened the provisions of the Notification No.2/95-CE, dated 4.1.1995 and, thereby, the duty amounting to ₹ 4 ,33,00,961 /- has been short paid and the same requires to be recovered by invoking the provisions of Section 11A (1) read with Section 11A (2) of the Central Excise Act, 1944 (for short t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 4.1.1995 and Notification No.8/97- CE, dated 1.3.1997, has come to the conclusion that the adjudicating authority is not justified in pinning down the assessee to take the benefit only under the Notification No.2/95-CE but not under the Notification No.8/97-CE. Accordingly, has given relief to the assessee by setting aside the order in original passed by the adjudicating authority. The Revenue, being aggrieved by the order so passed by the Tribunal, is before us in this appeal. 11. Shri. K. Swami, learned counsel appearing for the Revenue, has taken all the pains to take us through the Notifications, which are the subject matter of this appeal, the reasoning of the adjudicating authority, and the so called fallacy in the reasoning, and the conclusion reached by the Tribunal. Learned counsel also refers to the EXIM Policy 1997-2002. Learned counsel would submit that in order to take the benefit of the Notification No.8/97-CE, the assessee must purchase the raw material manufactured in an industrial unit in a domestic area and if such raw material is used for production or manufacture of goods and sold in the domestic area as provided in the EXIM Policy, then only, it could tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al enactment. This Court has observed in the said decision: A provision especially a fiscal statute providing for an exemption, concession or exception has to be construed strictly. An exemption notification has to be interpreted in the light of the words employed by it and not on any other basis. A person who claims exemption or concession must establish clearly that he is covered by the provision(s) concerned and, in case of doubt or ambiguity, the benefit of it must go to the State. 15. The observations made by the Constitution Bench of this Court are binding on us. 16. Furthermore, this Court in Associated Cement Companies Ltd. v. State of Bihar Ors ., (2004) 7 SCC 642, while explaining the nature of the exemption notification and also the manner in which it should be interpreted has held: 12. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he public interest so to do, hereby exempts all excisable goods (hereinafter referred to as the said goods) specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured in a hundred per cent export oriented undertaking or a free trade zone or an Electronic Hardware Technology Park (EHTP) unit or a Software Technology Parks (STP) unit and allowed to be sold in India under and in accordance with the provisions of ,- (i) paragraphs 102 and 114 of the Export and Import Policy, 1 April, 1992 - 31 March 1997, in the case of hundred percent export oriented undertaking or a free trade zone; or (ii) notification of the Government of India in the Ministry of Commerce No.42(N-8)/92-97, dated the 14th September, 1992 upto a value not exceeding forty percent of the value of and finished goods manufactured, in the case of a Electronic Hardware Technology Park (EHTP) unit; (iii) notification of the Government of India in the Ministry of Commerce No. 33/(RE)92-97, dated the 22nd March, 1994, upto a value of production of software manufactured in the case of a Software Technology Parks (STP) unit, from so much of the duty of excise levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) unit means a unit established under and in accordance with Software Technology Parks (STP) Scheme notified by the notification of the Government of India in the Ministry of Commerce No.4/(RE-95)/92-95, dated 30th April, 1995 and approved by an inter- Ministerial Standing Committee appointed by the notification of the Government of India in the Ministry of Industry (Department of Industrial Development) No. S.O. 117(E ), dated the 22nd February, 1993. [Notification No.2/95-CE, dated 4.1.1995] In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured, in a hundred per cent export-oriented undertaking or a free trade zone wholly from the raw materials produced or manufactured in India, and allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a), (b), (d) and (h) of paragraph 6.8 or of paragraph 6.20 of the Export a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTA in any mode, including on-line data communication, shall be permissible up to 50% of FOB value of exports and/or 50% of foreign exchange earned, where payment for such services is received in free foreign exchange. h. Items included as by-products in the LOP/LOI may be sold in the DTA on payment of applicable duty. Note :- In the case of units manufacturing electronics hardware and software, the NFEP and DTA sale entitlement shall be reckoned separately for hardware and software. Other Supplies In DTA 9.10 The following supplies in DTA shall be counted towards fulfillment of export performance and NFEP: a. Supplies effected in DTA in terms of paragraph 10.2 of the Policy. b. Supplies effected in DTA against payment in foreign exchange. c. Supplies to other EOU/EPZ/SEZ/EHTP/STP units provided that such goods are permissible for procurement in terms of paragraph 9.2 of the Policy. d. Supplies made to bonded warehouses set up under paragraph 11.14 of the Policy and/or under section 65 of the Customs Act. e. Supply of goods against special entitlement of duty free import of goods. f. Supply of goods to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods which are, normally, produced/manufactured outside India and, but for any reason, they are imported to India. That only means, there must be a similarity between the goods manufactured by a 100% EOU with that of the goods produced or manufactured outside the country but if it is imported into this country. The Notification provides two conditions in order to avail the benefit provided under the Notification. They are conjoint and not disjoint. Firstly, the exemption is available only, if the goods are produced or manufactured in a 100% EOU or FTA or EHTP unit or STP unit and, secondly, they must be allowed to be sold as per EXIM Policy 1997-2002. Proviso is appended to the Notification. A reference to the same may not be necessary for the purpose of the disposal of this appeal. 21. Then we come to the Notification No.8/97-CE. The said Notification is again issued by the Central Government in public interest in exercise of its powers under Section 5A(1) of the Act. It exempts finished goods, rejects and waste or scrap enumerated in the Schedule to the Tariff Act, from payment of excise duty under Section 3 of the Act. Yet again, the Notification provides the entitlement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Notification issued by the Central Government. The Notification speaks of finished goods produced or manufactured by a 100% EOU and if it is sold in a DTA, the said EOU can take the benefit of the Notification no.8/97-CE. If for any reason, we accept the submission of Shri K.Swami, learned counsel for the Revenue, then we will be adding something into the notification and, in our opinion, the same is impermissible. 25. The notification requires to be interpreted in the light of the words employed by it and not on any other basis. There cannot be any addition or subtraction from the notification for the reason the exemption notification requires to be strictly construed by the Courts. The wordings of the exemption notification have to be given its natural meaning, when the wordings are simple, clear and unambiguous. In Commissioner of Customs, Kolkata v. Rupa Co. Ltd., (2004) 6 SCC 408, this Court has observed that the exemption notification has to be given strict interpretation by giving effect to the clear and unambiguous wordings used in the notification. This Court has held thus: 7. However, if the interpretation given by the Board and the Ministry is clearly erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in order to claim benefit of a notification, a party must strictly comply with the terms of the notification. If on wording of the notification the benefit is not available then by stretching the words of the notification or by adding words to the notification benefit cannot be conferred. The Tribunal has based its decision on a decision delivered by it in Rukmani Pakkwell Traders v. CCE. We have already overruled the decision in that case. In this case also we hold that the decision of the Tribunal is unsustainable. It is accordingly set aside. 30. In Commissioner of Customs (Preventive), Gujarat v. Reliance Petroleum Limited, (2008) 7 SCC 220 this Court has held: '30. We are not oblivious of the proposition of law that an exemption notification should be construed directly but it is also well settled that interpretation of an exemption notification would depend upon the nature and extent thereof. The terminologies used in the notification would have an important role to play. Where the exemption notification ex facie applies, there is no reason as to why the purport thereof would be limited by giving a strict construction thereto. 31. The comparison mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 33. In Commissioner of Central Excise, Shillong v. North-Eastern Tobacco Co. Ltd., (2003) 1 SCC 161 , this Court has observed thus: 10. The other important principle of interpreting an exemption notification is that as far as possible liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. See State Level Committee v. Morgardshammar India Ltd. 34. In our view, the Tribunal has rightly understood the purpose and the language employed in Notification no.8/97-CE and the EXIM Policy 1997-2002. Therefore, we do not see any legal infirmity in the judgment and order so passed by the Tribunal. 35. Accordingly, while rejecting the appeal filed by the revenue, we confirm the findings and conclusions reached by the Tribunal. In the facts and circumstances of the case, the parties are directed to bear their own costs. C.A.No.3588/2005, C.A.No.3638/2006 C.A.No.1388/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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